Best Buy: Not your standard corporate comeback

FORTUNE — When was the last time you went to a Best Buy? And more importantly, would you consider going back? I ask question knowing that some of you — you know who you are — are laughing, or smirking, or at least have written Best Buy off as dead carrion for the e-commerce giants.

In 2013, it’s been hard to tell whether Best Buy BBY is slipping into or sneaking out of the death ward. But one thing seems clear — this isn’t your standard corporate comeback. There are turnarounds like Dell DELL, or HP HPQ, or Yahoo YHOO that generate more headlines than they do fast results. And there are lower-profile turnarounds that are showing evidence of progress against all odds. Best Buy is, for now, in the latter camp.

I say “for now” because it could all fall apart. If the stock market is any kind of authority on a company’s chances of success, then Best Buy is a star this year. Of course, a stock’s price is not always a reflection of financial health. It’s often a feather buffeted by the upwinds of speculation and the downdrafts of short-selling. But for many investors, this is why the stock is so interesting.

Best Buy’s stock closed at $27.89 Tuesday, after rising as high as $28.37 earlier this month. That’s the stock’s highest point in 18 months. In early 2010, Best Buy traded as high as $48 a share before beginning a steady, three-year decline that sent the stock as low as $11 a share at the end of 2012, losing more than three-quarters of its market value.

As 2013 began, few expected the stock would be one of the top performers in the first half of the year. Consumer electronics was the province of Amazon AMZN, with its extensive user reviews, broad inventory, and — above all — low prices. Best Buy had survived while rivals like Circuit City went bankrupt, but the retailer seemed to be fighting a losing battle.

What’s more, 2012 had been a rough year for Best Buy in particular. Then-CEO Brian Dunn, who had joined Best Buy in 1985 as a salesman, closed some of the big-box stores that once exemplified its retail prowess. He invested in training its blue-shirt workforce, trying to counter the complaints about its customer service. He experimented with smaller mobile stores.

There were questions of whether this was enough to turn Best Buy around. The company’s bonds were priced near junk levels. Two weeks after Dunn announced his restructuring, he resigned amid allegations of improper conduct with an employee. Shortly after, Richard Schulze, the founder and chairman of Best Buy, stepped down as well, after an internal inquiry showed he knew of the relationship but didn’t report it to the board.

Enter Hubert Joly. The French-born executive cut his teeth at McKinsey and EDS in the ’80s and ’90s before becoming CEO of Vivendi Games, which owned Blizzard, the gaming company responsible for the Warcraft franchise. He moved on to become CEO of Carlson, a private and low-profile travel conglomerate home to brands like Radisson, Park Inn and TGI Fridays.

Just why Best Buy pinned its dimming future on an executive bred in enterprise computing, fantasy gaming, and hotels is as intriguing a question as why Joly left a comfortable post at a travel giant he’d largely built, to salvage a dying consumer-electronics chain. Whatever the answers to those questions may be, the match has so far benefited all parties but the short-sellers. Best Buy is having its best year ever. And Joly is the turnaround artist who is making it happen.

In an interview with Bloomberg TV shortly after he became CEO, Joly said off the bat something that made me laugh out loud: “We took our eye off the ball. Don’t ask me why since it doesn’t matter.” A novice CEO wouldn’t say that unless he was either supremely naïve, or supremely confident. And if he were confident, he’d have a plan.

Joly had a plan. He wanted to out-Amazon Amazon. He vowed that Best Buy would match any price Amazon offered for an electronics item in its inventory. Not in the old strategy of compensating shoppers who brought in a printed-out Amazon receipt, but the more dynamic way of trying to match what Amazon charged in real time. Because the little secret about Amazon’s electronics was that it wasn’t always the cheapest in the way it used to be.

Joly went further. He tried to turn the practice of showrooming — consumers walking into brick-and-mortar stores to test drive electronics, then buying said item cheaper and tax-free on Amazon — to its advantage. He made it easy for customers to buy something on Best Buy’s site and pick it up in a store hours later — besting Amazon’s one-day shipping.

And once you’re ready to walk out of Best Buy with the thing you came for, then won’t you consider buying something else? Maybe a smartphone accessory? Or if not that, then that DVD of that movie you’ve been wanting to see for — oh look! — only a buck or so more than the cost of renting it? Or if not that, how about a nice pack of Red Twizzlers? You can’t miss it as you stand in the checkout line.

According to Joly, there was a 50-50 chance you’d make that second purchase. Joly had reverse-engineered Amazon and somehow re-engineered its digitally trained consumers to spill greenbacks at Best Buy’s physical stores. Yes, it meant deep-discounting even its top-selling products. But it also meant building customer loyalty, ideally with customers who had become loyal to Amazon.

What could go wrong?

Two things. One, Best Buy’s claim of always matching Amazon and others may have some holes in it. It only takes a little creative underpricing by a rival to prove that claim false. Which is why Amazon rarely makes it a promise, even while it broadcasts it as a principle. Customers won’t object if you offer the lowest prices in general. They won’t forget if you promise the lowest price on a deal and don’t deliver.

The second thing is Schulze. This is a founder who can’t let go of his company. Schulze built a retail chain that many customers came to believe was better at exploiting them than serving them. Once he was pushed out, he seems to have proven himself better at securities law than he ever was at managing an electronics retailer in the age of Amazon.

Schulze is a bit like Michael Dell in that he’s appealed to Wall Street to save his company. But while it’s clear Dell wants to take back his startup to make it great again, Schulze just wants to regain control. He has won two seats on Best Buy’s board. Once he did, he said this, “All of us are now locked together. I’m excited about what’s possible.”

But what is possible with Best Buy? The company nearly went the way of Circuit City in a an electronics-retailing industry driven by Amazon. That hasn’t happened yet because of a CEO who seems to have the rare knack of turning a company around. The market suggests that this new CEO might continue to do his thing. But the founder seems to have other plans.

Best Buy’s turnaround seems like an against-all-odds affair at best. But the company is up against a retailer whose founder, Jeff Bezos, is often called the best CEO since Steve Jobs. How do you compete with that? A first step, however tentative, is to decide whether your company is directed by your founder or your current CEO.The stock market is betting that Best Buy will move out of the critical ward. The question is, which surgeon is better qualified to make that happen?